German Federal Court of Justice Decision on Wirecard Insolvency

On November 13, 2025, the Ninth Senate of the German Federal Court of Justice (Bundesgerichtshof, the “BGH”) issued its judgment in litigation arising from the insolvency of Wirecard AG (“Wirecard”). The decision resolves a question of great practical significance in Germany that has been debated among German lawyers and in the German courts for a long time: should claims of shareholders who were allegedly induced to purchase shares by misleading capital markets disclosures rank pari passu with all other unsecured, unsubordinated creditors or should they be treated as subordinated equity claims?

The Higher Regional Court (Oberlandesgericht) of Munich had previously held, in a widely discussed decision, that such shareholder claims are to be treated as ordinary insolvency claims pursuant to section 38 of the German Insolvency Code (Insolvenzordnung – InsO), ranking pari passu with all other unsecured, unsubordinated insolvency creditors (thereby diluting the recoveries of such other unsecured creditors). The BGH has now overturned that decision, holding that shareholder damages based on capital market misstatements constitute equity claims and are therefore subordinated in insolvency.

Background

Insolvency proceedings over Wirecard were opened by the Local Court (Amtsgericht) of Munich on August 25, 2020, following the collapse of the former leading payment processing company. In the insolvency proceedings, approximately 50,000 shareholders filed damages claims of about EUR 8.5 billion. Together with other creditors, the total claims filed amounted to approximately EUR 15.4 billion, against an estate with assets currently valued at only approximately EUR 650 million.

The defendants in the case were the insolvency administrator of Wirecard and the common representative of the holders of a EUR 500 million bond issued by Wirecard. The plaintiff, a German investment management company, had acquired Wirecard shares on the secondary market.

The plaintiff filed its claims as ordinary unsubordinated insolvency claims pursuant to section 38 InsO, alleging damages arising from misleading capital markets disclosures and failures in ad-hoc disclosure by Wirecard. The insolvency administrator rejected this characterization of the claims, arguing that they were instead subordinated equity claims.

The court of first instance, the Regional Court (Landgericht) of Munich, in a judgment dated November 23, 2022, dismissed the plaintiff’s action to have its claims registered as ordinary insolvency claims, holding that the claims were properly treated as equity. The court of second instance, the Higher Regional Court (Oberlandesgericht) of Munich, overturned that decision on September 17, 2024, holding that the shareholders’ capital markets damages claims could be pursued as unsubordinated, ordinary insolvency claims, reasoning that such claims were not inextricably linked to the shareholders’ status as equity holders but were instead comparable to claims of other third parties against the company.

Decision by the BGH[1]

The BGH overturned the decision of the Higher Regional Court, holding that shareholders’ capital markets damages claims do not qualify as ordinary unsubordinated insolvency claims and are instead subordinated equity claims.

The BGH reasoned that the German Insolvency Code provides for a clear ranking and order of distribution: claims of shareholders are subordinated to the claims of ordinary creditors. According to the BGH, damages claims brought by shareholders for misleading ad-hoc disclosures or other misstatements seek compensation for a failed investment in the company’s business. Such claims, in the view of the BGH, arise because of the shareholder relationship and are sufficiently proximate to the equity position to warrant subordination. Focusing solely on the alleged deception, the BGH held, does not change the purpose of the transaction (the acquisition of an equity interest) or the policy that shareholders bear the risks associated with their status vis-à-vis creditors.

The court left open whether the claims at hand should rank pari passu with claims under shareholder loans (pursuant to section 39 para. 1 sent. 1 no. 5 InsO) or be subordinated even further as pure equity claims. The distinction had no relevance in this case as neither category of claims can expect to receive any recoveries.

Practical Implications

• The decision is final and provides clear and authoritative guidance on the previously unresolved and highly relevant question of the ranking of capital market damages claims of shareholders in insolvency. It should, however, be noted that the plaintiffs have announced that they are considering filing a constitutional complaint with the German Constitutional Court (Bundesverfassungsgericht) where alleged violations of fundamental rights can be asserted.
• According to the BGH, the ranking in insolvency is clear: shareholders’ capital markets damages claims do not qualify as ordinary insolvency claims and are subordinated as equity.
• The financial ramifications from this decision can be significant – in the case of Wirecard, rather than sharing pari passu with ordinary unsubordinated creditors in the proceeds of the available assets (currently valued at approximately EUR 650 million), the equity investors are subordinated and cannot expect any recovery. Conversely, unsubordinated ordinary creditors will not have their recoveries diluted by the EUR 8.5 billion of shareholder claims.
• The decision has been welcomed by representatives of the credit markets for restoring reliability and predictability to the pricing of credit in Germany.